Sangqu hosted a media briefing on Thursday morning to discuss Transnet’s recovery plan and provide an overview of the board’s first 100 days in office.
In a bid to navigate the treacherous waters of the modern freight logistics landscape, Transnet has embarked on an ambitious journey to address a myriad of internal and external challenges.
Appointed on 11 July 2023, the Transnet board, under the leadership of its chairperson, Andile Sangqu, set forth to engage various stakeholders, including labour, employees and government agencies, to revive the performance of its six interdependent divisions.
READ: Popo Molefe resigns as Transnet board member
Sangqu hosted a media briefing on Thursday morning to discuss Transnet’s Recovery Plan, providing an overview of the board’s first 100 days in office.
Multifaceted challenges
Transnet’s recent history has been marred by a slew of challenges, both external and internal.
The global Covid-19 pandemic wreaked havoc on the company’s operations, while climate crisis concerns added pressure to transform the organisation’s practices.
Cyberattacks, theft, spare shortages, financial losses, state capture allegations and labour strikes have further complicated Transnet’s endeavours.
READ: Transnet chaos continues as another executive jumps ship
The company also found itself embroiled in a dispute with CRRC, a locomotive supplier, regarding pricing and locomotive refunds.
To resolve these issues, Transnet partnered with the Special Investigating Unit and the SA Reserve Bank.
Recovery Plan
Transnet’s response to these challenges comes in the form of a comprehensive recovery plan.
This strategy encompasses several key elements aimed at restoring the company’s capacity and efficiency across all its divisions. The recovery plan emphasises the following:
- Guiding principles: The plan is guided by principles, such as improved asset utilisation, enhanced operational execution, greater employee engagement and a reinforced accountability framework.
- Primary focus: The core focus of the plan is to devise tactical initiatives that drive volume recovery and improve rail and port operations, with an emphasis on equipment availability, reliability and asset quality.
- Constraints: The plan acknowledges the constraints linked to the current state of moving and fixed assets, including rolling stock, port, marine equipment and infrastructure.
- Key element: A pivotal element is the improvement of maintenance planning and adherence to plans to resolve operational bottlenecks and equipment shortages.
- Financial sustainability: To secure financial sustainability, Transnet will manage capital allocation efficiently and concentrate on funding essential areas, such as infrastructure renewal while proactively collecting outstanding debts.
- Private sector engagement: Transnet intends to collaborate with the private sector to enhance operational and investment capabilities. The focus remains on using private sector partnerships (PSPs) to spur growth and operational delivery in key market segments. Additionally, the company will divest non-core assets.
Accountability
Transnet said it would partner with the National Logistics Crisis Committee (NLCC) to enhance operational effectiveness in ports, rail and port terminals.
This includes streamlining procurement procedures, maintaining safety and achieving specific performance metrics through dedicated workstreams.
Workstreams 1, 5, and 7 focus on improving the freight rail network, rationalising procurement and enhancing security, respectively.
Management review
In a bid to improve its executive management, Transnet has initiated a review process.
This impartial review is being conducted by an independent service provider and is set to be completed by 30 November 2023.
The review aims to ensure that the right competencies are identified and assessed, thereby optimising the leadership within the company.
Digital future
Transnet is embracing digitisation through its initiative called “The Single Source of the Truth.”
This project, scheduled for completion by August 2024, will focus on data integrity, automation of reporting processes, infrastructure investment for secure data integration and the utilisation of artificial intelligence and machine learning for trend prediction and decision-making.
As of May 2023, Transnet introduced live reporting with visual dashboards and key performance indicators.
Finances
Over the past five years, Transnet has experienced a decline in its financial health, with declining revenue and increasing operating expenses.
This has resulted in lower operating profits and an increase in total borrowings.
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These financial challenges have prompted Transnet to appeal to government for assistance in managing its substantial R130 billion debt burden.
The road ahead
Sangqu said Transnet’s management and board are committed to prioritising the recovery plan.
He said:
The next few months are, therefore, critical. Management and the board are giving this priority attention and will continue to work with our employees, organised labour, government business and other key stakeholders, as we stabilise Transnet and position it for growth.
Transnet’s acting chief financial officer Hlengiwe Makhathini confirmed reports that the entity was looking at a cash injection.
“Transnet has requested that National Treasury provide an equity injection to support the recovery plan implementation needed to reduce debt and meet required financial ratios for debt capital market participation,” he said.The DA’s Ghaleb Cachalia and Dion George said: The ANC must confront the inconvenient truth that Transnet, much like every other SOE, is a haven for systemic inefficiency, corruption and economic imprudence. They said:
Despite receiving nearly R6 billion in prior bailouts, the entity remains unviable and stands as a massive impediment to achieving sustainable economic growth.
The party said government should stop the cycle of fiscal irresponsibility and implement necessary reforms. “Instead of seeking more taxpayer money, the government should speed up the privatisation of Transnet. Exporters with capacity should be allowed unrestricted access to Transnet corridors for product transportation.”
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